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tv   Nightly Business Report  PBS  September 6, 2012 7:00pm-7:30pm EDT

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>> this is nbr. captioning sponsored by wpbt >> susie: good evening. i'm susie gharib. the head of the european central bank makes good on his promise to save the euro. we'll tell you about his bold new measures to rescue europe's struggling economies. >> tom: i'm tom hudson. mario draghi's plan boosts stocks around the globe, and here at home, where the s&p 500 stock index jumps to pre-crisis levels. how are investors feeling today, compared to four years ago? >> susie: and amazon introduces a new kindle fire, and the new paperwhite e-reader. we look at how its new models stack up. >> tom: that and more tonight on nbr! >> susie: u.s. stocks rallied to
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their highest levels in four years after europe's central bank announced a sweeping plan to solve the region's debt crisis. five weeks after pledging to do "whatever it takes" to preserve the euro, e.c.b. president mario draghi delivered on his promise by launching a program to buy unlimited quantities of euro- zone bonds. investors around the globe reacted to the concrete move with broad-based buying of stocks. on wall street, all the major averages rose by about 2%-- the dow skyrocketed 245 points, the nasdaq surged 66, and the s&p 500 jumped almost 29 points. mario draghi is finally getting his way. the head of europe's central bank has been battling the region's power players on exactly how to save europe. draghi's plan for unlimited bond buys is aimed at lowering borrowing costs for debt laden countries like spain and portugal. >> under appropriate conditions, we will have a fully effective
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backstop to avoid destructive scenarios with potentially severe challenges for price stability in the euro area. >> susie: but those bond purchases come with strict conditions, and the e.c.b. will only help those countries that follow the rules. to make his proposal more palatable, draghi agreed to waive the central bank's senior creditor status on any bonds it buys. that means private creditors would be treated equally in case of default. among e.c.b. members, only germany's bundesbank objected to draghi's plan. in a statement today, the bundesbank said its president regards the purchases as "tantamount to financing governments by printing bank notes." nick colas says the draghi plan buys time, but it still doesn't solve europe's growth problem. he's chief market strategist at convergex group. nick what do you think of this, does the program make sense, is it a good step?
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>> it is a very solid step and i think you saw the markets respond to that today. it's open-ended. it goes out through three years. and it does buy the euro quite a bit of time to help some of the countries that are really on the periphery and still quite troubled begin to address the longer-term problems. >> but it doesn't solve all the problems. i mean it does pump in a lot of money into these struggling economiesment but it doesn't deal with all the spending issues and getting the debt down. and it doesn't deal with how to get these economies growing again, right? >> that's absolutely true. all it does is buy some time. but quite a bit of time and i think the response you saw from markets today was more a sense of relief that we're going to have a chance to have that time versus any of the nearer term deadlines that were being talked about or a lot of the problems you were seeing in the debt markets with periphery countries like portugal, spain and italy paying higher and higher borrowing costs. it buys time but it doesn't really resolve anything. >> so how will we know if
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it's really working or not. let's say in 2, 3, 4 years, what kind of shape will countries like spain or italy or portugal be in? >> well, the consensus of investors that we speak to about the state of the european economy basically agree that most of the european economy region is going to be in recession for the back half of this year and going into next year. unemployment rates are still very high. economic growth is still quite sluggish. the best-case scenario is that you see these economies begin to grow again in the latter half of 12013. and begin to grow more substantially in 2014. but no one is expecting anything more than 2 or 3% gdp growth as these economies begin to recover. >> speaking of growth here in the u.s., everybody is waiting for this job's report that is coming out tomorrow. the consensus estimate is that american businesses add something like 130,000 new jobs. what are you expecting? >> we're expecting a little bit better. we're expecting something closer to 150,000 jobs
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added. an unemployment rate that basically is 8.2 to 8.3%, pretty much unchanged from the past few months that we've seen. >> so if its number comes out as you're saying, combined with what we heard from europe today, what does ben bernanke and the fed do? do they need to add more stimulus to the economy? >> well, i'll tell you. the investors that we speak to are pretty will convinced that the federal reserve ben bernanke and the-- will have to do something incremental next week. the meeting ends on thursday, and there is a press conference with ben bernanke speaking to the press at 2:15 on thursday so we'll hear a lot more then. the consensus is very much that the fed will continue to act and put more stimulus into the economy on thursday. >> and what about the markets, real quick question, we have 30 seconds left. do you think individual investors are ready now to buy into this rally? >> you know, it's been very, very tough. investors have been really buffetted by a lot of volatility the last couple of years and even as you
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rightly know we are at multiyear highs. investors are still very, very cautious on this equity market. they're still worried about the economy, worried about the election, the fiscal cliff. there are still many issues investors are focused on and worried about. we'll see people come back in but very slowly. >> thanks a lot, nick. good information, good conversation, nick colas chief market strategist at convergex group. >> tom: still ahead, chevy hopes to spark interest with younger buyers as it rolls out a new mini-car. we take the spark for a test drive. some encouraging news about the job market today from the latest reading on private sector jobs. payroll processing firm a.d.p. reports private payrolls added 201,000 jobs in august. that was well above the 145,000 economists were expecting, and it comes ahead of the closely watched august jobs report due out from uncle sam tomorrow morning. >> susie: that report and
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today's market rally may help to restore confidence in the u.s. economy. stocks are at their highest point since president obama took office. still, many americans are asking themselves if they're better off now than they were four years ago. investors are looking at their financial statements as a guide. but as erika miller explains, that doesn't necessarily mean americans are feeling better about their economic situation. >> reporter: four years ago, the financial crisis was getting worse and the global economy falling off a cliff. so it's no wonder many americans are feeling better about their financial situation now versus four years ago. >> i'm better off right now than i was four years ago by a long shot. >> i feel more comfortable, because i'm older, i have more of a vision of what i want for my future. >> reporter: but others say they're worse off, especially those living paycheck to paycheck or out of work. >> three years ago, i had a job. i've been disemployed for a year
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now. >> reporter: and plenty of other americans aren't exactly sure where they stand. >> i don't know if i have a lot to base it on; i'm just a couple of years out of school. >> reporter: a recent survey by wells fargo shows americans are almost evenly divided between feeling better about their situation, worse, and the same. >> every individual's circumstances are different. and as we talk to our clients, one of the things we hear is making sure you have a plan and sticking to that plan. i think those that are potentially feeling worse off may not necessarily have stuck to that plan. >> reporter: the economic recovery is maddeningly slow, and unemployment remains much higher than it was four years ago. but in spite of those concerns, the stock market has sustained an impressive rally. since the november 2008 election, the dow is up 38% and the s&p 500 42%, but the real winner has been the nasdaq composite, which has gained 76%. but sadly, many retail investors have missed out on the gains. t.d. ameritrade branch manager
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jeff goldberg says many clients are more concerned with avoiding risk. >> sometimes, in people's minds, the higher the market, the more risk there is of falling. i think they're leaning more toward bonds than equities, blue chips, and less speculative issues. >> reporter: but some think individual investors will start to wade back into the waters after the november elections. >> everyone i know is looking for some level of clarity or some level of certainty as to the leadership in this country. so regardless of your political leaning, there will be a lot more clarity following the november elections. >> reporter: voters will have many issues to consider when deciding how to cast their ballots in november. but financial position is sure to be key. three out of four americans expect the outcome of the elections will impact their net worth. erika miller, nbr, new york. >> tom: president obama takes the stage in charlotte tonight at the democratic national convention. he follows last night's speech from former president bill clinton.
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clinton urged voters to be patient, because president obama inherited the worst economic crisis of any president in history. in the swing state of virginia, darren gersh asked voters whether their patience is running out. >> reporter: all the videos and speeches at the democratic national convention are aimed at voters in key swing states like virginia. here in northern virginia, the economy has rebounded from the great recession to a remarkable degree, but even here, opinion is sharply divided on whether the president has done enough. the housing market in parts of northern virginia is back at record levels. unemployment in the area is just 4.5%. government spending has had a huge impact here. >> we have virtually no unemployment in places like arlington county, where the unemployment rate is under 3%. >> reporter: but not everyone is giving the president credit for northern virginia's relative good fortune. owner linda caldwell says business is slow at the occoquan coffeehouse. >> i don't see too much effect in straightening things out, one way or the other. >> reporter: and the argument president clinton made that no
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president could have fixed in four years all the economic problems barack obama inherited hasn't changed many minds. >> whether he could clean it up in four years or not, i think it is time for a change and give the next guy a shot, and hopefully he can fix our problems. and if he doesn't do it in four years, we'll go on to the next one. >> reporter: jacqueline st. clair and her husband own a small business. she didn't vote for the president four years ago and won't now. >> i think there is more that could have been done. i definitely think we could be in much better shape than we are now. >> reporter: if anything, the arguments at the convention seemed to do more to confirm voters' opinions than change them. barbara dade agrees four years is not enough time to judge the president. >> i kind of thought that was true even before he said it. i thought, "who in the world would be stupid enough to think the mess that he inherited could be cleaned up?" i watched what george bush did for eight years, and i was upset
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before obama even ran. >> reporter: but president clinton did finally make the case democrats like louise mokone were waiting to hear. >> he paved the way for obama. i really believe this next four years for obama-- and i know he is going to win-- i think it's going to make a difference. i think he is going to really show what he can do. >> reporter: and that is exactly what the president plans to do tonight-- show voters his economic vision for the next four years. >> susie: you know, it's interesting, darren, the people in your piece have very strong opinions about this election. so what does obama need to say to voters to sway them over to his way of thinking? i understand you just got some excerpts from the president's speech. >> just a few minutes ago. i mean obviously what we going to see is the president is going to try to continue the defense of his administration we heard so eloquently from bill clinton last night. he's going to try to paint romney as an extreme, risky alternative for the country, a change we don't want.
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but the president is going to lay out goals for his next four years. and they're interesting. one he's going to embrace deficit reduction. you remember he was criticized for not embracing the bowles simpson commission that president clinton talked about yesterday. he is going to say that he embraces the goal of four trillion or more in deficit reduction. so that's going to be an interesting change. he's also going to embrace the fracking revolution, energy independence, talking about creating 400,000 new jobs in natural gas. that's an interesting development. i think very interesting, the president is going to call for having the growth, cutting in half the growth of college tuition, a very interesting way to appeal to middle class voters. >> but people are interested in jobs. and you know, we've been talking about this jobs report tomorrow. to what extent is president obama you think going address details about his vision to turn the economy around and to create more jobs. >> well, i think all of
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these things that i just mentioned that we're hearing from the experts play into that we're not going to hear, you know this is not a time to lay out 20 pages of legislative language. it's a time to lay out themes and goals. but we are going to hear that the president is going to talk about ways to generate jobs in manufacturing. actually we've been having a bit of a manufacturing revolution. he's going to want to capitalize on that. energy, he talked about green energy, renewables. now he's talking about natural gas jobs. i think that's an interesting switch over. so those are some soft things we will hear from the president tonight. more details will probably come in the next couple of weeks. >> and we will heared from president himself in a few more hours, thanks so much, washington bureau chief darren gersh. >> thanks, susie.
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>> tom: it's been almost one year since amazon entered into the tablet computer business. today, it unveiled its newest offerings hoping to grab business away from market leader, the apple ipad. the new kindle fire comes with a high definition screen as amazon looks to grow its streaming media business. the updated fire was one of four kindle products announced today, including a self-lighting version of the original kindle e-reader. since the fire tablet launched last fall, amazon has made some inroads in an increasingly crowded tablet market. in the second quarter, apple's ipad still commanded 69% of the tablet market. samsung was a distant second at 8%, and amazon was third at 4%. amazon is hoping to carve out its market by pricing its tablets below those of ipads. the prices on the devices introduced today range from $159
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to $499. the price of amazon stock continues to go up, rising to a new all-time high. james mcquivey is a principal analyst at forrester research. what kind of competition do you think these new kindles present for apple? >> you know, they're very significant, not really becauser's going to eat into apple's market share. we do need to be honest about that. apple is leading with nearly 90 million tablets around the world. it's going to be hard for amazon to take in any portion of that. but what amazon does is makes apple watch very closely its rearview mirror. they're going to have to watch the pricing now in a way they haven't had to before. they're also going have to look at the smaller form factors. essentially amazon is saying we've got a tablet that fits whether you have a big one or medium size one. so yes apple will respond but in the long run app sell not the target here, it is samsung t is microsoft, and
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google. and amazon is putting itself in great position vis-a-vis all three of those other companies. >> i want to ask you about the selling price first though because it certainly is going to help with cash flow as we move into the holidays but not much with margin so explain the longer-term business opportunity that amazon is trying to carve out. >> you know, on the one hand this is a competition between tablet makers but it's also a bigger competition. it's a competition between business models. apple makes its money selling its premium price products. and amazon is one of these companies that has a razor-thin margin and actually wall street don't like that about amazon. but they just keep coming back and amazon keeps coming back saying now he, we're in the business of long-term transaction driven revenue. we're okay with a thin margin. and these devices, no exception. they're going to make, they make any money at all it will be very slim off the device itself and basically preempt any concern with that by saying in the event today, you know, we're going
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make money when you use the device, not when you buy it. now people at apple can say well that's ridiculous. we can make money off our devices. well, but it also means that apple now is going to have to reconsider its pricing. that will be a challenge on apple's performance on wall street. >> by the way dow expect any big price changes for instance, with the -- >> i don't think that apple is going to respond quickly. it's not their modus operandi, they don't like anyone to perceive they were pushed to do anything. we will see it gradually and it usually be justified in terms of feature enhancement. >> we will leave it there with for rest-- james mcquivey with for restry research
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>> stocks were up right from the opening bell right through to the closing bell, all of the dow 30 stocks were up. we have to see now if this momentum will continue into tomorrow. >> we will certainly know at 8:30 a.m. eastern time tomorrow morning when we get that non-farm payroll and unemployment rate report from the bureau of labor statistics, susie. in the meantime broad-based rally in our market to us the s&p 500 had buyers from the opening bell, and sustained gains throughout the afternoon, finishing at its highest level of the session, up 2%. the rally puts the index at its highest post-recession level.
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tonight's close is the highest since the holiday season of late 2007. volume was up from yesterday-- 733 million shares on the big board; 1.9 billion on the nasdaq. all ten of the major stock sectors gained at least 1%. the biggest gains were in the materials sector, up 2.6%. both the financial and technology sectors jumped 2.4%. this mix was also reflected in the largest percentage gainers in the dow industrials. bank of america gained 5% as banking stocks responded to the european central bank's pledge to backstop market volatility. volume was very heavy in b-of-a shares. they closed at their highest price since april. for cisco systems, shares rallied 4.4% on stronger volume, closing at a four month high. and industrial conglomerate general electric is at a new 52 week high, up 3.2%. one financial stock left out of the rally today was a.i.g. the insurer still is majority owned by the u.s. government, thanks to the bailout four years ago.
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shares fell 1.7% after announcing plans to sell more of its stake in its asian life insurance business. it's the third time a.i.g. has as part of that effort, a.i.g. okayed a $5 billion stock buyback. that would likely cut the government's stake to less than 50%. we saw more evidence of the growing men's clothing business; this time, from men's wearhouse. earnings were stronger than expected, and it raised its financial outlook for the year. shares responded by jumping 18.7%, rallying on nine times normal volume. the stock has now made up what it lost in early june when it tumbled after a disappointing outlook. just last week, joseph a. bank clothiers turned in its own stronger than expected quarter. shares continued climbing today, up 3.1%. the new c.e.o. at semi truck and engine maker navistar laid out his new road map for the company. the turnaround plan concentrates on navistar's north american truck and engine operations,
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improving quality and lowering expenses. investors and traders seemed to be encouraged. shares popped 17.4%. the stock has been in a down trend as the company has been hit by weaker truck demand and regulatory issues over exhaust from a new diesel engine. glass manufacturer owens illinois also has seen a shrinking stock price. but today, shares rose 8.9% after comments from a top executive. at an investor conference, the firm's chief financial officer said its current quarter outlook is essentially unchanged. that's seen as encouraging since the firm gets about 40% of its sales from europe. all five of the most actively traded e.t.f.s were up, led by the financial sector fund, up 2.4%. and that's tonight's "market focus."
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>> susie: tomorrow on nbr, as we mentioned, the august employment report is due out. we'll have reaction from wall street to washington. and we'll dig through the numbers with pimco's mohammed el-erian. and nbr's longest running market monitor returns-- james stack, president of investech research, on how investors should face the election and fiscal cliff. you'll soon be hearing a lot about the spark. it's a tiny new car from general motors, and the auto maker is hoping it can ignite interest among young buyers. the car's been a hit around the world, and now is hitting the streets in some of the nation's largest cities. diane eastabrook has more. >> reporter: on a chicago street
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teaming with big trucks, the chevy spark looks like an ant between two elephants. g.m. is rolling out the sporty spark in 18 urban markets across the u.s. it's the company's first foray into the mini segment. the base model spark is priced at just under $13,000, making it about two grand cheaper than the fiat 500 and scion iq. 2 weidman says chevy's mini car packs more bang for the buck. >> at $12,995, you get standard air conditioning, you get standard power windows, you get standard alloy wheels, which is unusual at that level. >> reporter: for a couple thousand dollars more, the spark comes equipped with my-link, an entertainment system that ties into smart phones for music, movies, and navigation. g.m. rolled out the spark a couple of years ago in south korea. that's where the small car is built. since then, the spark has been sold around the world, making the u.s. its final stop. g.m. is marketing the spark
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specifically to young adults between the ages of 18 and 31. those are consumers who typically dwell in urban areas where street parking is the norm and parking spaces are tight. managing editor dave thomas took the spark for a spin, and thought it offered a good ride and a lot of features for the money. but he questioned the wisdom of marketing the spark only to young drivers. >> the things that are so positive about it translate in a broad way-- low price, lots of features. every shopper we see at wants lots of features at a low price for any car. >> reporter: thomas also points out the spark could be a tough sell to young adults who are struggling to find jobs in the tough economy. still, g.m. sold 2,000 sparks last month just as it was arriving in showrooms. the company says that was better than expected. it thinks if it can steer young buyers into the spark, they may keep driving other g.m. products for years to come. diane eastabrook, nbr, chicago. >> it sure would make
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parking easier here in new york, tom. >> tom: certainly would. >> susie: that's "nightly business report" for thursday, september 6. have a great evening, everyone, and you as well, tom. >> tom: good night, susie. we'll see you online at, and back here tomorrow night. captioning sponsored by wpbt captioned by media access group at wgbh
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